Don’t Put CareDX Stock in Your Portfolio’s Pipeline
On the surface, there’s a lot to like about CareDX (NASDAQ:CDNA) stock. It’s a company that’s based on a concept you might find intriguing” transplant diagnostics.
However, getting from concept to execution, and then profitability, is a different story entirely. Sorry to be the bearer of bad news, but CDNA stock gets a “D” rating because frankly, the company’s financials are far from ideal.
CareDX strives to make each step of the transplant process easier. It’s hard not to root for a company that’s helping patients in need of an organ transplant.
However, as investors we sometimes have to separate our feelings about a company from practical considerations. If CareDX can’t capture profits from its transplant diagnostics business, then cautious investors should probably find another company to wager their hard-earned money on.
What’s Happening with CDNA Stock?
Just a quick glance at the history of CDNA stock tells a grim story. The shares were valued at $90+ in the summer of 2021 but recently dropped to just below $16.
There’s no dividend to speak of here, so there’s no consolation prize for CareDX’s downtrodden investors. Before we abandon this company completely, though, let’s at least be fair and learn about what CareDX has to offer.
The company’s most significant product seems to be AlloSure Kidney, a test to identify kidney injuries. CareDX says this product is used by over 30,000 patients – not a huge number, but AlloSure Kidney isn’t the company’s only product.
Then there’s AlloCare, an app that helps transplant patients “manage medications, track fluids, and monitor blood pressure, steps, and mood.” Informational apps aren’t necessarily known to be massive moneymakers, especially during a time when people generally use search engines to gather information.
Other products include an at-home blood-draw service RemoTrac and a testing/typing solution AlloSeq Tx. So, are these and CareDX’s other products big enough revenue generators to cover the company’s expenses?
CareDX’s Has Gaping Financial Potholes
Turning to CareDX’s most recently filed Form 10-Q, we can see that the company’s total revenue improved moderately to $80,634,000 in 2022’s second quarter, versus $74,188,000 in the year-earlier period. It’s not a massive increase, but worth noting nonetheless.
Thus, CareDX is apparently selling a decent volume of its products, but that’s not the complete story. Checking the company’s bottom-line results, we can see some glaring red flags.
During the same time frame, CareDX’s total operating expenses jumped from $78,930,000 to $102,353,000. The company spent more in nearly every category, from product costs to research and development as well as sales and marketing.
The end result was a Q2 2022 net loss of $21,697,000. This is significantly worse than the $1,927,000 net loss from the year-earlier quarter. In diluted per-share terms, CareDX’s net loss widened from 4 cents to 41 cents.
What You Can Do Now
It’s awfully difficult to give anything more than a “D” rating to a business with those financial stats. If this bottom-line trajectory continues, CareDX’s existence as a “going concern” may be in jeopardy.
Besides, CDNA stock has been heading toward zero for a while now. All in all, CareDX can’t seem to find its financial footing even with an interesting business concept. Therefore, it’s wise for investors to just maintain a healthy distance.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
